Investor: “Oh, hi! Aren’t you Professor Blithers?”
Economist: “Yes, indeed, young lady. And to what pleasure do I owe your acquaintance?”
Investor: “Oh, I had you for Economics 101 back in my college days.”
Economist: “Ah, I see. Well, it’s a pleasure to see you.”
Investor: “Professor, I am so confused about the economy. Would you be able to help me?”
Economist: “Why, of course. After all, I have a PhD in Econometrics.”
Investor: “Oh, interesting. So, ah, what is that exactly? I’m sorry, professor, but I only took the basic introductory class.”
E: “Well, it’s all quite complicated, you see. In essence, it is the study of economics through the application of advanced mathematical models using Big Data, Artificial Intelligence, and Supercomputers.”
I: “Wow. Sounds impressive!”
E: “Indeed. Now, how may I help you?”
I: “Well, I was wondering what to invest in? It seems like everything these days is so expensive: stocks, bonds, real estate, gold… You name it!”
E: “Gold? You’re not one of those gold bug fanatics, are you?”
I: “Well, I do have a few gold coins stashed away. You know, just in case.”
E: “In case of what? We don’t live in the Stone Age anymore, my dear. With our advanced computer models, we can now keep a firm grasp on the economy. In the old days, the economy was run by unsophisticated business people. Now, we professional economists run the show. With our advanced econometric models, things are different today.”
I: “I see. But, what does that have to do with my gold coins?”
E: “Why, they’re a barbarous relic! Worthless lumps of metal. Dug out of the ground, stored in expensive vaults, earning no interest, and producing nothing of value. A useless waste of your valuable dollars!”
I: “Hmm. With all due respect, Professor, I’m not too sure about that. Those valuable dollars don’t seem to be buying much these days.”
E: “Well, everything is relative, young lady. We live in a modern global economy now. Exchange rates between currencies are carefully monitored. Gold is a worthless artifact of ancient times before advanced economics. I would advise you to dispose of your coins. They’re going to lose value at an increasing rate. They’re a throwback to the dark old days before the advent of econometric models, advanced technology, and monetary engineering.”
I: “Well, okay. Gee, thanks for letting me know! I always wondered what the point was of holding a bunch of little coins. I used to keep 40 of them in a big sock in my dresser drawer, but when they became worth about $2000 each, I started getting nervous about keeping $80,000 in an old, smelly sock.”
E: “Why, just think of what you could do with $80,000! Maybe buy a luxury electric vehicle! Ride in style and save the environment!”
I: “True, but cars tend to go down in value, while my gold coins keep going up.”
E: “Well, times are different now, my dear. The world no longer needs to have gold as a reserve for our currencies. For the past 50 years, we have lived in a fiat money regime. Gold no longer takes center stage. People are beginning to realize that gold is an ancient relic that only creates the illusion of wealth.”
I: “But then why does it keep going up in price?”
E: “Some people still live in the past. They’ll soon realize that the world has changed. Modern economies are stable now. They function as smooth as silk. Thanks to our sophisticated econometric models, we can finely tune the dials and ensure consistent growth.”
I: “Growth of what?”
E: “Why, the money supply, of course.”
I: “But why does the money supply need to grow?”
E: “Well, it’s hard to explain to a layperson. The money supply must increase to provide more liquidity for investment and transaction flow. As our economy grows, so must the supply of funds to power it along. In addition, we must ensure that everyone has a job.”
I: “A job? Really? Wow, that’s impressive! I’m sorry for my confusion, but if the money supply grows, won’t that increase the price of my gold coins?”
E: “No, no, my dear! Do you recall from your college days the law of supply and demand? While the supply of gold coins is relatively stable, the demand for them will inevitably decline as the citizenry becomes more educated and understands the power of our econometric models to maintain growth, financial stability, and employment for all.”
I: “Thanks, Professor! Wow, this all sounds great! So, I should sell my gold coins?”
E: “Absolutely! As the veil of ignorance is removed, people will soon realize that we economists have the power to control financial destiny, insure the security of our currency, and power up our new knowledge-based economy. Gold is a useless relic of the past that will soon be consigned to the dustbin of history.”
I: “Gee, thanks again! I really appreciate the explanation. Now that you PhD guys are in charge instead of those greedy Wall Street bankers, I feel so much safer!”
E: “Yes, indeed. All that you need to do is trust us. The fate of our economy is in capable hands.”
I: “Hey, maybe we should change our currency to ‘In PhDs We Trust’ instead of ‘In God We Trust’. After all, who needs God when we have you guys?”